Weaker Data this Week may Help BOC with Decision

On Wednesday this week, Canada released its inflation data for the month of August. Although the MoM data was inline with expectations at -0.1%, the YoY headline number came in at 1.9% vs 2.0% expected. In addition, the Core Inflation Rate (YoY) came in at 1.9% vs 2.2% expected! Today, retail sales data was released for July. MoM the headline number was weaker at 0.4% vs 0.6% expected. However, even more concerning, is that the Retail Sales Ex-Auto MoM for July came in at -0.1% vs 0.3% expected. It is worth nothing that June’s number was revised from 0.9% down to 0.5%, which could account for today’s big miss, however that just means that the data was slowing even earlier the July!

In the Bank of Canada’s statement from their September 4^th meeting, Central Bank Governor Stephen Poloz stated that “the current degree of monetary policy stimulus remains appropriate”. Note that at this meeting the Bank did not present their projections for inflation and growth. However, the projections will be presented at the October 30^th meeting (these projections are done four times a year). At the September 4^th meeting, the BOC left rates unchanged at 1.75% as expected.

October 30^th is still a long way off, and we will see CPI data and Retail Sales data again during October. The Bank also must now grapple with how to handle the effect volatile oil prices may play into their decision, as well as the possible vote on the USMCA. But one must begin to consider that with the recent data, lower rates may be ahead for Canada.

USD/CAD is currently coiling in a long-term triangle extending all the way back to the beginning of 2016, as seen on a weekly time frame.

Source: Tradingview, FOREX.com

On a daily timeframe, USD/CAD traded lower off the shooting star on September 3^rd and has held the 61.8% retracement from the July 13^th low to the September 3^rd high. The pair is currently trading below horizontal support from the low on September 2^nd at 1.3270. The more important areas to watch are the trendlines of the previously mentioned long-term triangle, which are 1.3500 resistance and 1.3100 support.

Source: Tradingview, FOREX.com

From time to time, StoneX Financial Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.

FOREX.com is a trading name of StoneX Financial Pty Ltd.

The material provided herein is general in nature and does not take into account your objectives, financial situation or needs.

While every care has been taken in preparing this material, we do not provide any representation or warranty (express or implied) with respect to its completeness or accuracy. This is not an invitation or an offer to invest nor is it a recommendation to buy or sell investments.

StoneX recommends you to seek independent financial and legal advice before making any financial investment decision. Trading CFDs and FX on margin carries a higher level of risk, and may not be suitable for all investors. The possibility exists that you could lose more than your initial investment and CFD investors do not own or have any rights to the underlying assets.

It is important you consider our Financial Services Guide and Product Disclosure Statement (PDS) available at www.forex.com/en-au/terms-and-policies/, before deciding to acquire or hold our products. As a part of our market risk management, we may take the opposite side of your trade. Our Target Market Determination (TMD) is also available at www.forex.com/en-au/terms-and-policies/.

StoneX Financial Pty Ltd, Suite 42.01, 264 George Street, Sydney, NSW 2000 (ACN 141 774 727, AFSL 345646) is the CFD issuer and our products are traded off exchange.

Delayed London Stock Exchange (LSE) Data

The London Stock Exchange (LSE) market data displayed or referenced on this website is provided on a delayed basis and is not in real time. The delay period may vary but is typically at least 15 minutes. This data is intended for information purposes only and should not be relied upon for trading, investment, or other financial decisions. We do not guarantee the completeness, reliability, or suitability of the data for any particular purpose. Users should consult real-time data sources and obtain professional advice before making any financial decisions.